Stamp Duty

1. 2. 3. 4. 5. 6. 7. 8. 9. Introduction Chargeability Specified instruments Mode and time of Payment Who is liable to Stamp Duty and who is eligible to compound Stamp Duty Stamp Duty Rates and Exemptions (given in the Schedule) General Exemptions SD payable to Provincial Councils Administrative Provisions

Stamp Duty
1. Introduction
o Stamp Duty was first introduced in Sri Lanka under the Stamp Duty Ordinance of 1909. o Stamp Duty Act No. 43 of 1982 enacted in 1982 replaced the Ordinance o With the devolution of certain legislative powers to Provincial Councils under the 13th Amendment to the Constitution, the authority to legislate for Imposing Stamp Duty on transfer of immovable properties, transfer of motor vehicles and documents filed in legal proceedings is vested with Provincial Councils (w.e.f 1991) o Part III of the Finance Act No. 11 of 2002 made provisions for abolishing the operation of Stamp Duty Act No.43 of 1982 (w.e.f. May 2002) o Stamp Duty (Special Provisions) Act No.12 of 2006 while imposing Stamp Duty on certain specified instruments made provisions for re-operation of Stamp Duty Act No. 43 of 1982 with limited scope (w.e.f April 04, 2006). Relevant Gazette Notifications SD RATES: Gazette Extra-Ordinary 1439/1 (Dated 03.04.2006) (from 04/04/2006 to 06/10/2006) Gazette Extra-Ordinary 1465/19 (Dated 05.10.2006) (from 06/10/2006) Gazette Extra-Ordinary 1439/3 (Dated 03.04.2006) (for North East property transfers) SD EXEMPTIONS: Gazette Extra-Ordinary 1439/2 (Dated 03.04.2006) (from 04/04/2006 to 06/10/2006) Gazette Extra-Ordinary 1465/20 (Dated 06.10.2006) (from 06/10/2006) Gazette Extra-Ordinary 1478/7 (Dated 01.01.2007)

2. Chargeability (Section 3)
Stamp Duty is charged, at specified rates on every, specified instrument executed, drawn or presented in Sri Lanka; executed outside Sri Lanka in relation to a property in Sri Lanka and presented in Sri Lanka

3. Specified Instruments(Section 4)
An affidavit A policy of Insurance A warrant to act as a Notary Public A periodic licence to carry on a trade, business, profession or vocation A claim or demand from a credit card holder for payment on account of usage of the card A share certificate on new or additional issue or on transfer or assignment A mortgage for a definite sum of money and affecting any property A promissory note A lease or hire of any property A receipt or discharge given for any money or other property o Any other specified by the Minister by Gazette Order o o o o o o o o o o
(Please note Stamp Duty is chargeable on an instrument; not on a transaction)

4. Mode and Time of payment of SD

Mode Affixing (Government) stamps. Compounding by Authorized Persons. Payments to a prescribed Bank by cash, bank pay order or draft and getting endorsed by CGIR. Time of Payment Stamp Duty should be paid before or at the same time of the execution of an instrument. Share transfers executed in Sri Lanka can be stamped within 1 month (Section 8).

5. Who is liable to Stamp Duty and who is eligible to Compound Stamp Duty. (Section 6)
o Section 6 of the Stamp Duty Act (No. 12 of 2006) stipulates the party by whom the stamp duty is payable. It specifies the party in respect of 4 instruments Policy of insurance -- Person effecting the Insurance Transfer or assignment of shares Transferee or assigned Lease or hire Lessee Claim by the service provider from the holder of a credit card - Credit Card Holder In all other cases the person drawing, making or executing the instrument.

o Section 7 Compounding of Stamp Duty. CGIR may permit following persons Policy of insurance - Person issuing Insurance Policy Licenses Issuing Authority Credit Cards - Service Provider Payments to Employees employer (where employees more than 100) In any other situation, depending on circumstances - person issuing the instrument (Considering the impracticability/inexpediency of stamping)

The person authorized to compound the Stamp Duty is required to make certification on the relevant instrument on a rubber stamp that may be used in the following format.(section 7(2) ) FORMAT of the certificate: It is hereby certified that a sum of Rs.. payable as stamp duty in respect of .has been collected and remitted in terms of Section 7 of the Stamp Duty (Special Provisions) Act No.12 of 2006 Compounded Stamp Duty payment should be remitted to the Commissioner General quarterly.

6.
No. Instrument

Schedule-Types of Instruments, Rates, Exemptions etc..

Stamp Duty Rate By whom Payable Person who signs Person affecting the Insurance
Can be Compounded

Who is liable to pay compounded Stamp Duty -

Exemptions

Affidavit

Rs. 25/-

No

Policy of Insurance

Rs. 00.50 for every Rs. 1000/- or part thereof of the aggregate of the premia payable on the policy Rs. 1000/Rs. 1000/- or 10% of licence fee which ever is less Rs. 10/- for every Rs. 1000/- or part thereof

Yes

Insurance Co.

3 4

Notary Warrant Periodic Licence to carry on Trade business etc. Credit Card transactions

The Notary Public Licencee

Yes Yes

By Courts Issuing Authority

Affidavit made on request of any public officer or on a requirement of any written Law. * Life, Medical * Plant, Machinery, Equipment used in the civil Construction Industry or agriculture * any motor vehicles (other than motor vehicles used for travelling purpose) License - once and for all

Card Holder

Yes

Service provider

Issue, Transfer or assignment of any shares of a company

Rs. 5/- for every Rs. 1000/- or part thereof

Transferee /Assignee

No

*issue,transfer,assignmentof a unit in a Unit Trust/Mutual Fund. * Shares transacted in the trade floor on which share transaction levy paid. *Debentures * Certificates issued in lieu of existing shares - shares in Credit Information Bureau. *Given by a public officer in official capacity, on Food crops, on aircrafts, Jewellary (pawning) *On housing loan of Rs. 3 million or less from Bank/ Finance Co., Co-operative society, Public corporation or CGIR approved Provident Fund *(If housing loan exceeds Rs.3 mn. Stamp Duty payable on whole sum) Commercial Payments *Finance leases or Hire purchase agreement (other than motor vehicles used for travelling purpose) *Rental less than Rs. 5000/per month on buildings. On Lease/ Rental Agreement(such Receipt is not exempt).

Mortgage (for a definite sum of money which affects to a property)

Rs. 1/- for every Rs. 1000/- or part thereof

Mortgage e

Yes

Bank/relevant Institution

8 9

Promissory Note (a). Lease or hire of any Property (b).Hire purchase Agreement

Rs. 1/- for every Rs. 1000/- or part thereof Rs. 10/- for every Rs. 1000/- or part thereof, of the aggregate rent or hire. The aggregate rent or hire payable for the whole term comprised in the lease or hire agreement shall be deemed to be the aggregate of the hire or lease payable for the first twenty (20) years of such term. Rs. 1/- for every Rs. 1000/- or part thereof (maximum Rs. 50/-) 25,000 - 39,999 = Rs. 25/- 40,000 49,999 = Rs. 40/50,000 or above Rs. 50/-

Issuer Lessee

Yes only on movable properties*(I mmovable properties payment should be made to Bank)

Bank/relevant Institution Leasing co/Bank

10 (a)

10 (b)

A Receipt or Discharge given for money or property Receipt given for Remunerati ons (Gross)

Recipient

Yes

Recipient Authority

Employee

Yes

Employer

*Below Rs. 1000/-, Deposit into/from Bank/Financial Company. *immediate settlement by cash on passing goods/services *Remuneration payments below Rs. 25,000/-. *Death gratuity/ Compensation for death or injury *Pension Receipts

7. General Exemptions
o Instruments executed by or, on behalf of the Government of any Country (in respect of which an Order under S.67(3) of Act No.43 of 1982 is in force) o Instruments in respect of supply of any goods or service to Diplomatic Missions of any State (or an Organization to which the Diplomatic privilege Act No.9 of 1996 is applicable) and reciprocal benefits are available. o Instruments executed by, or on behalf of, or in favour of a Co-operative Society o Any instrument in relation to which the Government would be liable to pay SD (if not for this exemption) o Any instrument executed by a Regional Development Bank or Any instrument executed in favour of a Regional Development Bank

8. SD payable to Provincial Councils

Stamp Duty on transfer of immovable properties and on Court documents are payable to Provincial Councils. However, such duties in relation to North and Eastern provinces (where no any provincial enactment to charge such duties is in operation at present) are payable to Commissioner General of Inland Revenue in accordance with rates specified in the Gazette Extra-Ordinary No. 1439/3 dated April 3, 2006.
Stamp Duty rates on Transfers (including Gifts) of Immovable Properties within North Eastern Province Gift of Property First Rs.50,000/ -3% Balance -2% Other Transfers First Rs.100,000/ Balance

-3% -4%

(Mode of payment is affixing of stamps or payment to a prescribed bank; cannot be compounded.)

9. Administrative Provisions
1. Procedure adopted in payment of Stamp Duty 1.1 Affixing of Stamps - Only Govt. Stamps - Cancellation of Stamps (Sec. 7 of 1982 Act). Person/s who execute shall cancel the stamp - by writing his/ their names - and initiating in ink. - Over Rs. 50/= Stamps shall be cut or punched. 1.2 Compounding the Stamp Duty In spite of affixing stamps, persons authorized by the CGIR may compound the stamp duty on relevant instruments. (see; item no.5above) 1.3 Payment to a prescribed bank account - This type is applicable for - Issue / transfer/ assignment of company shares. - Leases and mortgages - Immovable property transfers in North East provinces. - The bank account prescribed is A/c No. 204- 1001- 6-0085127 Peoples Bank Headquarters.

- Payments shall be made by cash/ bank draft/ pay order only. - Upon such payment, such instrument shall be certified and endorsed by an Assessor thereon. (Sec31 1982 Act)

2. Admissibility of instruments executed during the time 1982 Act was in operation. - Where such instrument executed before May 2002 is not duly stamped, it shall not be admitted in evidence by any person at any event. However, such instrument may be admitted if the due stamp duty with a penalty not exceeding 300% of the duty is paid. 3. Obligation to give receipts in certain cases (Sec. 23 of 1982 Act)
Updated on 16//08/2007 Stamp Duty Unit, 1st Floor, Dept. of Inland Revenue. Tel: 2437213, 2331848 Fax: 2437213

Note: Loans and Advance payments to Employees liable at 10(a) rates. (Rs.1/- for every Rs.1000/- subject to a maximum of Rs.50/-) all Payments to employees other than Loans and Advances are considered as remuneration payments including reimbursements paid for the benefit of employees) Where salary payments/other remuneration payments accumulated and or added up and one payment is made: Stamp fee is payable as one instrument (Rs. 50/- maximum) Contract Agreements, Service Agreements/sales Agreements etc. are not defined as "Specified Instruments" Therefore not subject to Stamp Duty